We use cookies on this website to give you a better user experience. By continuing to browse the site, you are agreeing to our use of cookies. Learn more

The Exchange Rate and Exporting: Evidence from the Indonesian Manufacturing Sector

The Exchange Rate and Exporting: Evidence from the Indonesian Manufacturing Sector
Date:
27 March 2019
Authors:
Chandra Tri Putra, Dionisius A. Narjoko
Tags:
industry and manufacturing, Indonesia

Print Article:

This paper examines the impact of the exchange rate on export performance using plant- and product-level data for the Indonesian manufacturing sector over the period 2008–2012. It addresses both the impacts of the level and volatility of the exchange rate on the value, scope, and composition of exported products. The study finds that the exchange rate affected the export values for the period of analysis, confirming the importance of the exchange rate level and volatility. The findings show that high exchange rate volatility tends to reduce the exporters’ product scope, minimising uncertainty. Meanwhile, the impact on product concentration within firms encourages exporters to specialise, concentrating on exporting only on a few products that, presumably, are the exporters’ core-competence products. This particular finding underlines the importance of product competition in the export market as another factor affecting the scope and concentration of exporter products. That is, tougher competition in the destination market reduces the mark-up across products and induces an exporter to skew its sales toward its best-performing/core-competence products. The study underlines the importance of policy for hedging the volatility of the exchange rate, which means developing the financial markets to provide sufficient resources or mechanisms for this.

ERIA-DP-2018-18

Search ERIA.org

Latest Multimedia

Indonesia's ASEAN Chairmanship 2023 High-Level Policy Dialogue: ASEAN Digital Community 2045

ERIA Knowledge Lab Discusses Scaling Up Innovation and Digital Technology Ecosystem

Is ASEAN Ready for Electric Vehicles? | ASEAN Insights Podcast

Latest Articles

energy, fuel, carbon neutrality, ASEAN
14 March 2024
Editor(s)/Author(s): Seiya Endo, Soichi Morimoto, Hideaki Obane, Kei Shimogori, Ichiro Kutani, Toshiyuki Sakamoto, Shigeru Kimura
Achieving carbon neutrality involves the strategic selection of low or zero-carbon fuels and[...]
Energy, LNG, liquefied natural gas, LNG prices, Southeast Asia, ASEAN
14 March 2024
Editor(s)/Author(s): Han Phoumin, Hiroshi Hashimoto
Between 2020 and 2023, the liquefied natural gas (LNG) market[...]